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Environmental Economics

An Integrated Approach

By Philip E. Graves

CRC Press – 2013 – 264 pages

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  • Add to CartHardback: $99.95
    978-1-46-651801-8
    August 21st 2013

Description

Rigorous, yet written in a way that facilitates understanding of complex material, Environmental Economics: An Integrated Approach provides practical and working knowledge of how environmental policy analysis is developed. This is a true textbook, detailing the tools required to conduct that analysis and also discusses weaknesses in the existing methods, underlining areas for future improvement. This approach allows readers to get a sense of what is known and what is not known about environmental economics.

The book discusses why we have environmental problems and how we would optimally react if we had perfect information about environmental benefits and costs. It then describes methods in use—and their flaws—to acquire the information necessary to enact environmental policy. The book starts with a categorization of goods types, concluding that environmental problems stem from non-excludable goods that are either rivalrous or non-rivalrous. The author introduces the Coase Theorem in the first chapter, then details how households and firms would behave when facing a zero price on pollution versus a price on pollution set equal to presumed known marginal damages. He connects the economic system with the environmental system by aggregating up from individual decisions to the aggregate market system and the aggregate environmental quality.

But, of course, the information available is rarely perfect. Clarifying the information difficulties faced by households, firms, and policy makers, the author recognizes that there is both a knowledge gap and a communication gap. He then covers the methods policy makers employ in an attempt to gain sufficient insight into marginal benefits and marginal costs to properly set a marginal damage tax, properly limit emission rights, or properly provide public goods. The book then examines the nature of these methods and their likely bias, before concluding that surviving the next 50 to 100 years will lead to a world of ever-improving levels of economic and environmental goods—but the sobering qualifier is that without proper environmental policies there is a significant probability that our species will not be able to reach that desirable outcome.

Reviews

"The style and coverage of the book make it perfect as a set text on an undergraduate course in environment economics. It can also function as a practical guide to the application of environmental evaluation. The expert analysis of the limitations of evaluation tools will also make it of interest and value to more experienced readers. Very highly recommended."

Gareth Myles, University of Exeter

"The textbook offers many interesting examples and cases that conceptualize the environmental economics issue and its connotations. I recommend reading the book for those who are interested in the topic and want to study in modern and interactive way."

—Ondrej Vojacek, University of Economics, Prague

"Environmental questions caught the attention of just a few economists in the late nineteen sixties and seventies. … The sole economics department in this mix was at the University of Chicago with George Tolley’s research group. Philip Graves, fresh out of graduate school, was there when it all started! He showed us how urban and environmental problems were linked. Then and now, with this new text, he continually demonstrates how creative use of micro economics can advance our understanding of the challenges in designing environmental policy."

—V. Kerry Smith, Arizona State University

"Phil Graves presents an integrated approach to environmental economics, covering the various multidisciplinary aspects of the subject, including the modeling of the impacts of pollutants on health and environment and the crucial subject of environmental policy and decision making. I find the book well written, with clear explanations, illustrated by examples. … Students can be inspired by this book to contribute as environmental economists towards bringing about a better environment."

—Ari Rabl, Ecole de Mines de Paris, France

"Professor Graves is an eminent environmental economist and has taken a fresh look at the state of knowledge in this very important field. … I expect the book to be of interest not only to students and researchers but to a general audience interested in what economics could bring to bear in solving the major environmental problems of the day."

—Ujjayant Chakravorty, Professor of Economics, Tufts University

"The broad philosophical perspective and parsimonious use of basic calculus to give precise focus creates a blend that students of environmental economics should find appealing and digestible. … likely to stimulate thinking and constructive discussion."

—Glenn Blomquist, University of Kentucky

Contents

Section 1 Environmental Policy with Perfect Information: The Basic Theory Introduction

Introduction

A Taxonomy of Types of Goods

The Externalities, Public Goods, and Property Rights Connection

Market Failure or Missing Markets?

Alternative Regulatory Approaches

Summary and Looking Forward

References

Appendix

The Economy and the Environment: Uncontrolled Case (Pre-Institution)

Introduction

The Polluting Household

The Polluting Firm

The Aggregate Economy

The Aggregate Environment

Summary and Looking Forward

Reference

The Economy and the Environment: The Case of Optimal Controls (Post-Institution)

Introduction

The Household with Optimal Pollution Controls

The Firm with Optimal Pollution Controls

The Optimal Aggregate Economy

The Optimal Aggregate Environment

Summary and Looking Forward

The Provision of Public Goods (Pre- and Post-Institution)

Introduction

The Lighthouse Example and Vertical Demand Aggregation

Financing and Issues of Equity

Summary and Looking Forward

Reference

The Role of Time in Economics: Interest Rates, Compounding, and Discounting

Introduction

The Interest Rate as the Opportunity Cost of Current Consumption

Constant Value, Appreciating Value, and Depreciating Value Assets

Summary and Looking Forward

Benefit-Cost Analysis with Perfect Information

Introduction

A Representative Project and the Net Present Value Decision Criterion

B/C Ratios and Internal Rate of Return Criteria May Mis-RankProjects

Summary and Looking Forward

Section 2 Environmental Policy with Imperfect Information7. Information Difficulties: The Individual Household and theBenefits of Environmental Policies

Introduction

The Difficulty of Knowing Marginal Damages from Residuals

The Crucial Nature of Environmental Quality Perceptions

Summary and Looking Forward

Reference

Information Difficulties: The Individual Firm and the Costs ofEnvironmental Policies

Introduction

Types of Environmental Policy Costs

The Economic Incentive Approach

Summary and Looking Forward

Information Difficulties: The Policy Maker

Introduction

The Well-Known “Demand Revelation” Problem out ofa Given Income

A Less Well-Known “Input Market Demand Revelation” Problem

A False and a True Dynamic Scenario

Much Ado about Nothing?

Summary and Looking Forward

References

Section 3 Valuation—Acquiring Information about Environmental Benefits10. Environmental Valuation: Overview

Introduction

Referenda

Constructed Markets: Surveys, Interviews, and Experiments

Sum of Specific Damages

The Hedonic Method

The Travel Cost Method

Overview of Valuation Problems with the Methodologies in Use

Summary and Looking Forward

Environmental Valuation: Voting on Environmental Referenda

Introduction

Voting Does Not Reflect Intensity of Wants

Voting Paradoxes: Intransitivities

Other Problems with Voting

Summary and Looking Forward

Environmental Valuation: Constructed Markets

Introduction

The Conduct of a Constructed Market Study

Problems in Interpretation of Constructed Market Valuations

Summary and Looking Forward

References

Environmental Valuation: The Sum of Specific Damages Approach

Introduction

Problems with the Sum of Specific Damages Approach

Summary and Looking Forward

Reference

Environmental Valuation: The Hedonic Method

Introduction

Value of Statistical Life

Hedonic Valuation of Environmental Quality

Wage Compensation for Environmental Amenities

Property Value Compensation for Environmental Amenities

Wage and Property Value Hedonics Are Not Alternatives: The Multimarket Hedonic Method

What if Single-Market Hedonic Analyses Are Employed Rather Than Multimarket Analyses?

Summary and Looking Forward

References

Environmental Valuation: The Travel Cost Method

Introduction

Problems with the Travel Cost Method

Summary and Looking Forward

References

Do Decision Makers "Care" about Efficiency and Equity?

Introduction

Political Incentives to Undervalue the Environment

Jurisdictional Incentives to Undervalue the Environment

Summary and Looking Forward

References

The Impact of Concerns about Equity on Environmental Policy

Introduction

Equity at a Point in Time

Equity over Time: Intergenerational Considerations

Summary and Looking Forward

Reference

An Interdisciplinary Environmental Policy AnalysisMethodology

Introduction

The 5-Box Diagram

Summary and Looking Forward

References

Section 4 Epilogue1

An Overall Assessment of the State of Environmental Policy Making

Introduction

Policy Costs

Policy Benefits

Summary and Looking Forward

Reference

The Past and the Future

Introduction

The Doomsters

The Boomsters

Balancing the Disparate Views

The Porter Hypothesis

The Environment as an Asset in a Broader Portfolio Context

Summary and Looking Backward

References

Index

Name: Environmental Economics: An Integrated Approach (Hardback)CRC Press 
Description: By Philip E. Graves. Rigorous, yet written in a way that facilitates understanding of complex material, Environmental Economics: An Integrated Approach provides practical and working knowledge of how environmental policy analysis is developed. This is a true textbook,...
Categories: Environmental Law - Environmental Studies, Ecological Economics